Dow Jones aerospace leader Boeing reports Q4 results early Wednesday as the company battles quality control and delivery concerns for its 737 Max 9 planes. Boeing stock retreated Tuesday.
FactSet expects Boeing to report a loss of 78 cents per share, narrowing from the loss of $1.75 per share last year. Analysts forecast slower revenue growth for a fourth consecutive quarter, rising 6% to $21.18 billion.
Emergency Landing Fallout
Boeing 737 Max 9 planes returned to the skies last week as Alaska Airlines and United Airlines resumed flights on Friday and Saturday. The Federal Aviation Administration grounded all U.S.-based 737 Max 9 jets in service at the beginning of January following an emergency landing during an Alaska Airlines flight on Jan. 5. Alaska Airline expects to complete all 737 Max inspections by the end of the month. The airline also plans to increase oversight of Boeing 737 Max 9 production, Alaska announced in its Q4 report.
However, The FAA capped production expansion of new Boeing 737 Max aircraft. It is launching an investigation into the Dow Jones giant's manufacturing process to ensure quality control, the regulator announced Wednesday. The increased oversight will include a larger floor presence at Boeing facilities. The FAA will also assess potential safety-focused reforms around Boeing's control and delegation processes.
Meanwhile, Boeing is enhancing its own control procedures. The company instituted additional controls at Boeing and supplier Spirit AeroSystems to ensure quality for its exit door plugs and similar structures. Boeing also invited 737 operators to review its production quality procedures and launched an independent assessment of its Quality Management System.
United Seeks 737 Max Substitute
However, the quality concerns have prompted some airlines to turn elsewhere for their planes. United Airlines approached Airbus about buying more A321neo jets as an alternative to delayed Boeing 737 Max 10 aircraft, Reuters reported, citing a person familiar with the matter. The 737 Max 10 is the longer version of the Max 9 model. Both the Max 10 and shorter 737 Max 7 model are both awaiting certification from the FAA.
United has not canceled any of the 277 Max 10 jets it has on order, but has removed them from its internal plans, CEO Scott Kirby said last week. Mike Leskinen, United's chief financial officer, told The Wall Street Journal that, "we're rooting and we're doing everything we can to help that aircraft get certified. It's a great aircraft, but we can't count on it."
United's current fleet includes 79 737 Max 9 planes, which it was required to ground for inspections.
Ireland-based Ryanair'sRYAAY CEO Michael O'Leary said on Tuesday that, "if United don't want to take them, Ryanair certainly will," referring to the Boeing 737 Max 10 aircraft.
Boeing Stock
BA stock fell 2.3% Tuesday, retreating further from its 10-day moving average. Boeing tumbled about 19.4% since Jan. 5 following the Alaska Airlines emergency landing.
Shares dived 23% year-to-date.
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